Infratil sees 30% lift in CDC earnings, maintains dividend
AUCKLAND: Infratil is signalling a 30% earnings improvement from its CDC Data Centres investment in the current financial year.
CDC, now the biggest asset in Infratil’s portfolio with a value of more than $1.4 billion, was expected to report operating earnings of $A145 million ($NZ155 million) to $A155 million, Infratil said.
That is up from $A117.5 million reported for the March year, itself a 63% improvement on the previous year.
CDC, which is aiming to have two largescale centres completed in Auckland by the end of 2022, was a standout performer in the group’s fullyear result yesterday. It contributed $59.6 million in earnings before interest, tax, depreciation, amortisation and changes in financial instruments (ebitdaf), $22 million more than the year before.
Infratil’s underlying ebitdaf climbed to $480.9 million, from $431.2 million a year earlier, excluding businesses sold during the past year.
CDC completed two expansions in Australia during the period and commenced construction on a third. Preparatory work began on two other sites in Canberra and Sydney, and the two Auckland sites.
Infratil chief executive Marko Bogoievski said the firm is confident in CDC’s forecasts, and noted the firm’s ‘‘prudent expansion’’ from Canberra, into New South Wales and now New Zealand.
‘‘Data centres aren’t created equally’’ and CDC was wellpositioned by its strong links with its corporate customers and the federal Government in Australia, he said.
Infratil shares rose 3% to $4.965, trimming the stock’s decline so far this year to 1.5%.
The company did not provide an earnings forecast for the current year but maintained its final dividend at 11c a share, payable on June 15 to investors registered at June 8. In April the firm had signalled that could be trimmed.
Mr Bogoievski said the payout at 11c had been the firm’s preCovid19 expectation.
‘‘We just didn’t feel the need to moderate that,’’ he said, reflecting ‘‘a bit more confidence’’ the firm had now compared with in early April.
It made sense to provide the earnings expected from CDC, noting that its other investments, Trustpower and Tilt Renewables, had provided guidance earlier this week, Mr Bogoievski said.
However, for ‘‘sort of obvious’’ reasons, it was too early to take a firmer view on the outlook for Vodafone New Zealand (acquired in July), Longroad Energy in the US, Wellington International Airport, and
RetireAustralia.
Vodafone was a ‘‘highquality’’ part of the New Zealand economy, but would probably feel the impact of small business failures and some corporate costcutting, Mr Bogoievski said.
There could be some delay in that and Infratil was ‘‘cautious about the next sixmonth period’’.
The US market for power purchase agreements had also gone quiet temporarily, but quality developers like Longroad should still get their share of projects away as activity recovers, he said.
Wellington International Airport had been much harder hit by the crisis and its outlook would be determined by the pace that domestic and international travel recovers.
‘‘We have no idea when this transtasman bubble will start.’’
Despite the uncertainty, Mr Bogoievski said Infratil was still having to ration its capital towards its bestreturning opportunities.
The firm was also seeking new investments, although it was not convinced there were a lot of Covid19driven opportunities to invest in yet.
‘‘We are not out of the business in terms of looking for new opportunities.’’
Infratil aims to deliver annual returns of up to 15% by investing in fastergrowing infrastructure categories, with a focus on assets that have both defensive and growth characteristics. Its preference is towards renewable energy, data, telecommunications and retirement assets.
The $480.9 million of underlying ebitdaf reported yesterday was after international portfolio fees of $125 million due to manager Morrison & Co. It excluded businesses sold in the past year, including NZ Bus, Perth Energy and the firm’s former Australian student accommodation interests. — BusinessDesk